Key Takeaways:
Algerian President Abdelmadjid Tebboune was re-elected with 94.65% of the vote amid low turnout and scepticism about the electoral process, reinforcing the military's role as the political powerbroker.
Algeria's economy is heavily dependent on oil and gas exports, accounting for about 85% of export revenues in 2023, with increased European demand steering domestic investment into this sector.
Economic diversification efforts remain limited, leaving Algeria vulnerable to global energy price fluctuations and contributing to persistently high youth unemployment.
European countries, including France, Germany, and Italy, have been strengthening energy ties with Algeria, signing agreements to commence or increase gas supplies as they seek to reduce dependence on Russian gas following the 2022 invasion of Ukraine.
Background:
On 7th September, Algerians voted in their country’s presidential election. The heavily favoured incumbent Abdelmadjid Tebboune was re-elected with 94.65% of the vote. He faced two challengers, Youcef Aouchiche of the Socialist Forces Front and Abdelaali Hassani Cherif of the Movement of Society for Peace, who received 2.16% and 3.17% respectively. Algeria’s election commission stated that 48.03% of registered voters had cast ballots, however, it refused to state the number of voters. There was widespread scepticism surrounding turnout figures stemming from public mistrust in the political system. In a surprising move, the campaign managers of all three candidates released a joint statement noting inaccuracies in the election commission's preliminary results.
Tebboune had hoped to solidify his mandate with a high turnout following his assumption of the presidency following the country’s 2019 Hirak protests. The popular movement called for widespread political reforms, which led to the army's removal of long-term President Abdelaziz Bouteflika. The army has historically played a central role in Algerian politics, effectively shaping the political landscape and supporting leaders who maintain the status quo. This deep-rooted influence contributed to the low turnout, with many Algerians perceiving the outcome as predetermined and a continuation of military-dominated governance.
European Interest:
World leaders were quick to congratulate Tebboune on his re-election. Amongst them were French President Macron. Alongside historical ties that stem from the French colonial legacy in Algeria, France has attempted to deepen energy ties with Algeria to replace Russian gas from its energy mix following its 2022 invasion of Ukraine. After a visit in August 2022, Macron and Tebboune signed the Algiers Declaration for a renewed partnership between France and Algeria. Germany’s VNG AG and Italy’s Eni have done similar, signing agreements in 2024 and 2022 to commence or increase gas supplies. Algeria's economy is overwhelmingly dependent on oil and gas, which constitutes about 85% of its total export revenues in 2023, with Europe being its primary destination for its gas exports.
Looking Forward:
KSG assesses that Algeria’s reliance on oil and gas exports will continue to grow. This is due to increased demand from European customers for Algerian gas, steering domestic investment into the sector. Tebboune’s re-election reinforces the military’s position as Algeria’s powerbroker, which for now maintains stability and continuity, which is crucial for foreign investors. This stability, coupled with the continued war in Ukraine is likely to attract continued European investment in Algeria's oil and gas sector.
The Algerian government has expressed intentions to diversify the economy, but efforts remain limited. KSG assesses that this makes the country's financial well-being highly vulnerable to fluctuations in global energy prices. Gas prices remain significantly higher than historical averages following a dip from their 2022 peak, sustaining hydrocarbon export revenues even as oil prices decline. Yet the recovery of imports and large increases in public spending in 2023 and 2024, worsens the budget deficit when excluding hydrocarbon revenues.
The ongoing dispute between Algeria and Morocco regarding the Western Sahara region will continue to influence Algeria’s foreign policy considerations. KSG assesses that this has the potential to affect diplomatic relations as well as the business interests of European countries were national governments to support either Morocco or Algeria. This was the case in July 2024 following France’s recognition of the Moroccan autonomy plan for Western Sahara. As a consequence, Algeria withdrew its ambassador in Paris. In 2022, diplomatic tensions arose between Spain and Algeria over Spain’s stance on the Western Sahara conflict, leading Algeria to suspend its friendship treaty with Spain. Although gas flows were not impacted, Spain started diversifying its gas supplies, looking to other sources like the United States. KSG therefore assesses that any failings in energy diplomacy between North Africa and Europe are likely to provide opportunities for US providers, as well as risk the necessity for Europe to look to Russia.
Strengthening ties between North Africa and Europe are a net positive outcome for the EU and NATO, given the prospect for a more stable and secure region to its southern border. However, KSG assesses that the North African countries are still susceptible to considerable instability and aggressive regime change.